Inquiry letter on the annual report of Misho Ecology & Landscape Co.Ltd(300495) gem annual report inquiry letter [2022] No. 197 Misho Ecology & Landscape Co.Ltd(300495) board of directors:
Our department paid attention to the following situations in the post review of your 2021 annual report:
1、 Compliance of the 2021 audit report issued by the company's annual audit accountant
On April 29, 2022, Jiangsu regulatory bureau of China Securities Regulatory Commission (hereinafter referred to as "Jiangsu securities regulatory bureau") conducted an annual audit of your company in 2021, including Beijing Zhongtian Huamao Certified Public Accountants (general partnership) (hereinafter referred to as "Zhongtian Huamao") and the signing certified public accountants Zhang Qing Chang Yuanyuan issued the decision of Jiangsu Securities Regulatory Bureau on ordering Beijing Zhongtian Huamao Certified Public Accountants (general partnership) and Zhang Qing and Chang Yuanyuan to take corrective regulatory measures ([2022] No. 45, hereinafter referred to as the decision on ordering correction). The decision on ordering correction said that before Zhongtian Huamao, Zhang Qing and Chang Yuanyuan issued the 2021 annual audit report and internal control audit report for your company, The project quality reviewer clearly disagrees to issue an unqualified audit report on your company's financial statements and internal control. According to Article 59 of quality control standard No. 5101 - quality control of accounting firms on the audit and review of financial statements, other assurance and related services (revised in 2019) issued by the Ministry of finance, the business report can be signed only after the problem is solved. Zhongtian Huamao does not meet the conditions for issuing the audit report. Zhongtian Huamao's procedures for issuing your company's 2021 annual audit report and internal control audit report do not comply with the relevant provisions of the practice standards for certified public accountants.
The 2020 financial accounting report of your company was issued by zhongxinghua Certified Public Accountants (special general partnership) (hereinafter referred to as "zhongxinghua Institute") with an audit report that cannot express an opinion. The matters that cannot express an opinion involve the impact of capital occupation on the correction of errors in the financial statements, the recoverability of accounts receivable and contract asset balance, the adequacy of impairment provision, the failure of internal control, etc. On April 29, 2022, your company disclosed that the audit report on the special explanation that the impact of the matters involved in the audit report of Misho Ecology & Landscape Co.Ltd(300495) 2020 that cannot be expressed with opinions has been partially eliminated (Zhongtian Huamao zhuanshen Zi [2022] No. 001, hereinafter referred to as the report that the impact of the inability to express opinions has been partially eliminated) issued by Zhongtian Huamao shows that among the matters involved in the audit report of 2020 that cannot be expressed with opinions, A series of related effects caused by the fact that the major shareholders and related parties have not repaid the funds of the listed company and the project has been completed due to the failure of internal control, but the settlement sheet cannot be provided for confirmation have not been eliminated; According to the assurance report on Misho Ecology & Landscape Co.Ltd(300495) accounting error correction special instructions (zthmzsz [2022] No. 002, hereinafter referred to as the "accounting error correction report"), the special instructions of Meishang ecology have been prepared in accordance with relevant regulations except for the projects that have not obtained the completion statement and the projects that have not replied can not be verified. According to the provisions of the answers to questions on auditing standards for Chinese certified public accountants No. 16 - unqualified opinions in audit reports, certified public accountants should master and implement the auditing standards, application guidelines and answers to questions when performing audit services; If the matters with unqualified opinions on the financial statements of the previous period have not been solved, the certified public accountant shall express unqualified opinions on the financial statements of the current period. According to the auditing standards for Chinese certified public accountants No. 1502 - issuing a non unqualified opinion in the audit report (revised in 2019), a non unqualified opinion refers to a qualified opinion, negative opinion or unable to express an opinion on the financial statements. However, Zhongtian Huamao clearly pointed out in the audit opinion or audit conclusion of the report that the influence of unable to express opinions has been partially eliminated and the report on correction of accounting errors issued by Zhongtian Huamao that the matters involved in the audit report that cannot express opinions in 2020 have not been solved, but still issued an unqualified opinion with emphasized matters on your 2021 financial statement.
Zhongtian Huamao, Zhang Qing, Chang Yuanyuan and project quality reviewers are requested to explain whether they are required by the company to issue audit reports with unqualified opinions and other circumstances that hinder certified public accountants from maintaining professional ethics and professional doubts, and whether the procedures and types of audit opinions for issuing your company's 2021 annual audit report and internal control audit report comply with the relevant provisions of the code of practice for certified public accountants.
2、 Matters on which no opinion can be expressed in 2020
On April 29, 2022, your company disclosed that the impact of inability to express opinions has been partially eliminated issued by Zhongtian Huamao, which shows that among the matters that cannot express opinions in the 2020 audit report, a series of related effects have not been eliminated due to the completion of the project caused by the non repayment of the funds of the listed company occupied by major shareholders and related parties and the failure of internal control; The accounting error correction report shows that the special instructions of Meishang ecology have been prepared in accordance with relevant regulations, except for the projects that have not obtained the completion statement and the projects that have not received the reply can not be verified.
(I) failure of internal control
1. The 2021 internal control self evaluation report evaluates the effectiveness of the design and operation of the company's internal control as of December 31, 2021. According to the identification of major and important defects in the company's internal control over financial reporting, the board of Directors believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise's internal control standard system and relevant regulations; The company has not found any other major defects in internal control over non-financial reporting. From April 30, 2021 to April 29, 2022 after the benchmark date of internal control evaluation, your company has made five major accounting error corrections to the previous annual financial reports, and each major accounting error correction is quite different; On February 8, 2022, your company corrected the errors in the third quarter report of 2021; On February 25, 2022, your company corrected the errors in the 2021 semi annual report. The correction of accounting errors made by the company has affected all accounting periods since listing, and the relevant correction has triggered the significant defect standard of internal control over financial reporting formulated by your company for many times. On June 30, 2021, Wang Yingyan, the controlling shareholder and actual controller of your company, returned the company's 300 million fund occupation. On July 1, 2021, the fund was transferred out again, resulting in Wang Yingyan's fund occupation of the listed company. However, your company did not disclose the relevant information until January 2022. As of December 31, 2021, Wang Yingyan occupied your company's capital of 306198300 yuan, for which the company made a full provision for bad debts. In 2021, the amount of loss caused by Wang Yingyan's capital occupation accounted for 143.24% of the company's operating revenue in 2021, far exceeding the standard for major defects in your company's internal control over financial reporting.
From April 23, 2021 to the benchmark date of internal control evaluation December 31, 2021, independent directors Chai Mingliang, Wang Shaofei and Zhao Shan, non independent directors and deputy general managers Wang Yong and pan naiyun, supervisor Zhang Zhiling, chief financial officer Qian Renyong, Secretary of the board of directors and deputy general manager Zhao Xiang, deputy general managers Wang Xinggang, Yang Ning and Zhou Fangrong, and securities affairs representative Zhu Lingzhi resigned one after another. During this period, the actual controller of the company Wang Yingyan, the controlling shareholder, is also the chairman, general manager, Acting Secretary of the board of directors and Acting financial director. Your company points out that this situation leads to a certain lack of responsibilities, authorities and procedures in decision-making, implementation and supervision, and the management is above the internal control. The above situation meets the standard of significant defects in your company's internal control over non-financial reporting.
(1) Please state whether there are false records and misleading statements in the relevant statements that your company determines to be effective as of December 31, 2021 (the benchmark date of the internal control evaluation report), and whether there are other internal control defects in financial reports and non-financial reports as of December 31, 2021. If so, Please specify the specific situation.
(2) Please describe the specific process, time and personnel arrangement of your company's internal control evaluation, including but not limited to the formulation of evaluation work plan, the formation of evaluation working group, the implementation of on-site test, the identification of control defects, the summary of evaluation results, the preparation and submission of evaluation report, the review procedures, etc., and whether the internal control evaluation is carried out in accordance with the guidelines for enterprise internal control evaluation and other relevant rules, And report the working paper of internal control evaluation and relevant supporting documents. Independent directors are requested to check the above issues and express clear opinions. Zhongtian Huamao, Zhang Qing, the signing accountant, Chang Yuanyuan, the signing accountant and the project quality reviewer are requested to check the above problems and express clear opinions in combination with the process and conclusion of the self-evaluation of the company's internal control.
2. Zhongtian Huamao's "on the effectiveness of internal control over financial report of Misho Ecology & Landscape Co.Ltd(300495) December 31, 2021" (Zhongtian Huamao zhuanshen Zi [2022] No. 006, hereinafter referred to as "internal control audit report") shows that Zhongtian Huamao has implemented procedures including understanding, testing and evaluating the rationality of internal control design and the effectiveness of implementation, as well as other procedures deemed necessary by Zhongtian Huamao. The internal control audit report highlights that the company's management is superior to internal control. In addition, in 2021, the company's controlling shareholders occupied a large amount of funds of the listed company, the matters involved in which opinions cannot be expressed have not been solved, the correction of accounting errors for many times has affected all accounting periods since listing, the China Securities Regulatory Commission filed a case for investigation of the company and its controlling shareholder Wang Yingyan, the disclosure of major information is not timely and has been publicly condemned by our exchange for many times, and the board of directors and the board of supervisors have not completed the general election for more than one year. Zhongtian Huamao, Zhang Qing, Chang Yuanyuan and project quality reviewers are requested to explain the following problems respectively:
(1) In view of the audit plan and schedule, staffing and division of labor of the company's internal control, whether the relevant personnel have professional competence, combined with the fact that the company's management is above the internal control, the controlling shareholder has repeatedly occupied a large amount of funds of the listed company, the financial report in 2020 has been issued without expressing opinions, and the company has made several corrections of accounting errors, which affect all accounting periods since listing The CSRC's investigation of the company and its controlling shareholder Wang Yingyan, the untimely disclosure of major information and repeated public condemnation by the exchange, and the failure of the board of directors and the board of supervisors to complete the general election for more than one year, explain the risk assessment procedures and conclusions implemented by Zhongtian Huamao, the identified risk areas of major misstatement and the accounting subjects involved.
(2) The design, specific audit procedures, time and scope of enterprise level control, such as the control related to the internal environment, the control designed by the board of directors or managers above the control, the company's risk assessment process, the control of internal information transmission and financial reporting process, internal supervision and self-evaluation of control effectiveness, And the test results of enterprise level control.
(3) Combined with the requirements of various application guidelines of enterprise internal control and the test of enterprise level control, explain the specific audit procedures, time and scope for the design and operation effectiveness of business level control, as well as the test results of enterprise level control.
(4) The specific audit procedures, time and scope covered, and test results for the risks that the management is above the control, whether there is fraud among directors, supervisors and senior personnel, whether the certified public accountant finds that there is a material misstatement in the current financial statements and the internal control fails to find the misstatement in the operation process, and whether the supervision of the enterprise audit committee and the internal audit institution on the internal control is invalid, Whether the internal control is sufficient to deal with the risk of fraud.
(5) Explain all control defects identified in the audit process and the communication with the company, and disclose the written communication records with the board of directors and the management for the major defects and important defects.
(6) Based on the answers to the above questions, explain the completion time of the internal control audit, whether the internal control audit has obtained sufficient and appropriate evidence in accordance with the requirements of the practice rules such as the guidelines for enterprise internal control audit, whether it supports the opinions expressed on the effectiveness of internal control, and the specific impact of the effectiveness of internal control on the substantive audit procedures and types of audit opinions for the implementation of the 2021 financial report, And report the engagement letter of internal control audit.
(II) occupation of non operating funds
1. In November 2021, your company coordinated and organized the company's suppliers to hold a creditor's meeting. The 67 suppliers of the company transferred the creditor's rights totaling 594959800 yuan to Zhengzhou Zhiyun Youyan enterprise management center (limited partnership) (hereinafter referred to as "Zhiyun Youyan"). In December 2021, the controlling shareholder Wang Yingyan received a loan of 595 million yuan from Yantai Zhiyun youyou No. 1 Investment Center (limited partnership), the related party of Zhiyun Youyan, Used to repay the funds occupied by the listed company. After receiving the repayment from the controlling shareholder, the company immediately paid RMB 594959800 to Zhiyun Youyan. (1) According to your company's reply to our concern letter in the early stage, the company judges that if the repayment is frozen or forcibly repaid to the financial institution, it will not be able to revitalize the company's operating projects and drive the suppliers to maintain the subsequent cooperative relationship with the company. Therefore, the company decides to give priority to the construction project suppliers who are still cooperating and investing. Please list the content and amount of goods or services provided by the above-mentioned suppliers to the company in 2021 and the first quarter of 2022, the balance of accounts payable at the end of the period, the name of the corresponding construction project and the amount of revenue recognized for the construction project in the current period according to the name of the suppliers, and explain whether the above-mentioned suppliers continue to cooperate with your company to repay the above-mentioned suppliers. Zhongtian Huamao is requested to check, explain the audit procedures implemented for each supplier, the audit evidence obtained and its adequacy and appropriateness, and express clear opinions.
(2) Before the transfer of creditor's rights, your company should pay Wuxi shangrun Trading Co., Ltd. (hereinafter referred to as "shangrun trading") 383761 million yuan. According to the civil mediation document (2021) Su 0213 min Chu No. 6793, shangrun commerce and trade and your company confirm that they owe China Everbright Bank Company Limited Co.Ltd(601818) Wuxi Branch (hereinafter referred to as " China Everbright Bank Company Limited Co.Ltd(601818) ") 7.7546 million yuan in factoring. As the guarantor of shangrun business loan, your company has no repayment ability up to now, so your company confirms the estimated debt of 7.7546 million yuan. Before the transfer of creditor's rights, your company's debt to shangrun trading is enough to repay its loan from China Everbright Bank Company Limited Co.Ltd(601818) but shangrun trading is still unable to repay
